Mandatory Advance Payment Offers
Pursuant to Section 25 of the Expropriations Act, where no agreement as to compensation has been made with the landowner, the expropriating authority must, within three months after the registration of a plan of expropriation and before taking possession of the expropriated land, serve upon the registered owner an offer of compensation. “As part of the expropriating authority’s requirement under Section 25, the authority must offer the landowner an immediate payment of 100% of the amount of the market value of the owner’s land as estimated by the expropriating authority,” says Stephen Waque, senior partner at BLG LLP and a founding director and past president of the Ontario Expropriation Association.
This advance payment is available to the landowner to accept on a without prejudice basis. In essence, an expropriating authority is unable to obtain possession of the real property without first making an advance payment offer. This legislative provision provides some measure of protection to a residential landowner, especially in circumstance where the expropriating authority requires the landowner’s entire property for its works. As Waque explains, “The theory of the Act is such that if the landowner accepts the without prejudice advance payment offer, the landowner is in a more satisfactory position to purchase alternative accommodation.”
However, although advance payments are mandated for market value takings, no such statutory requirement exists for business loss or disturbance damages which may be financially more significant than the market value component of an expropriation claim. In cases where an expropriating authority seeks to require a real property from a business, there is often greater value in the business operation on the expropriated property than in the land itself.
Although there is no statutory requirement to make advance payments to facilitate mitigation of business loss, whether by facilitating relocation of a business or supporting it during a period of injurious affection (construction), there are several practical solutions available to fill the gap in the Expropriations Act that fails to fund advance payments for non‑market value entitlements. Such advances can be offered pursuant to partial releases or pursuant to Section 30 agreements. Often this requires expropriating authorities to consider studying the opportunities to mitigate business loss prior to the expropriation and requires owners faced with expropriation to consider releasing confidential financial information to the expropriating authority for that purpose.
Stay tuned for the next blog.